Report: India May Treat Cryptocurrencies as Commodities

India is not going to opt for a blanket ban on cryptocurrencies, but rather choose to treat them as “commodities,” a senior government official told news outlet Quartz, requesting anonymity, July 11.

According to the news outlet, a Finance Ministry panel has ordered a new study on VCs (Virtual Currencies), which may indicate that the government is not planning to completely ban VCs but would rather treat them as commodities. A senior official in the department of economic affairs with great knowledge of the panel’s discussion told the outlet that they don’t think the government aims to ban VCs.

The anonymous source said that the lawmakers’ main concern is how to “effectively regulate” crypto trading and track where all the money is coming from. They added that classifying it as a commodity may help them “better regulate trade” and keep an eye on the activities.

The source told Quartz that the panel is mostly concerned about tracking funds and investors in order to prevent illegal activities like illicit financing and money laundering. They said:

“Trade is not a criminal offence. Most of us trade in various asset classes in the stock market. So how is this [cryptocurrency trading] any different? What has to be in place is a mechanism to be sure that the money used is not illegal money, and to track its source is the most important thing.”

R Gandhi, Reserve Bank of India’s deputy governor told Quartz that, treating VCs as commodities would clearly show the investors that VCs are not real currencies:

“If these are used to settle transactions, then it acquires the nature of currency. So that is one thing that one needs to be wary of. But if people want to invest in a commodity then that is different, because then we can assume that they are aware of the risks involved.”

In May, the central bank announced that it will not provide services to firms dealing with cryptocurrencies, though it mentioned its plan to issue its own cryptocurrency in the future.

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